APPENDIX 171 



37. A lumber company bought 30 thousand acres of timber 

 lands; which cut 12 M. per acre; no net growth; they paid $10 an 

 acre, build a saw mill, planing mill and other buildings at a cost of 

 $150,000, and buy logging equipment at $50,000 more. They log 

 for $6 and mill for $4 which includes all expenses. They get $18 

 per M. feet on board car at mill ; cut 20 million per year. Taxes on 

 y 2 value at 10 per 1,000. interest at 5% ; depreciation and replace- 

 ment as follows : 



None for buildings, the repairs are paid by milling costs. 



All machinery is replaced once during the entire cut. Buildings 

 cost new $60,000 and are worth at end $10,000. Machinery at start 

 $90,000, at end $10,000. The logging outfit is kept up by logging 

 charge of $6. 



a. What is the yearly depreciation on buildings? What on 

 machinery ? 



b. What does the 20 million feet lumber cost them and what 

 is their net income per year? 



c. What is . the expectation value of the whole enterprise at 

 start and after 7 years cut ? 



d. If a fire reduces their forest by 5 years cutting what is the 

 damage to the company? 



